Labor Considers Scrapping Major Investor Tax Breaks
Prime Minister Anthony Albanese has provided the most direct indication yet that the Labor government may look to eliminate a significant tax benefit for investors, as the political landscape shifts with One Nation’s focus on addressing housing inequality.
For some time, the Albanese administration has been considering potential reductions in Australia’s attractive capital gains tax concessions. Capital gains tax is applied to profits made from selling assets such as shares or property and forms part of an individual’s annual income tax. A 50% discount is available if the asset has been held for more than a year.
During an interview with the Nine papers, Mr Albanese confirmed that the government is exploring policy changes beyond just housing supply. This comes as Labor grapples with the growing influence of One Nation, which has capitalized on public frustration over rising inequality.
“The system needs to work for people,” he said. “You don’t change that by rhetoric and by dividing people, which is what some of the populist rhetoric does. You do that by giving people a stake in the economy.”
Until now, Labor has focused primarily on increasing housing supply to address inequality, including its ambitious National Housing Accord targets. On Monday, Mr Albanese hinted at the possibility of increasing spending on incentives for state and territory governments to meet these housing goals.
“Resilience is also about economic resilience and social cohesion and making sure that young Australians understand they have a stake in the economy,” Mr Albanese said. “And housing is obviously one of the focuses of that.”
A Senate inquiry chaired by the Liberal Party is currently examining potential changes to housing tax arrangements. Financial journalist and author Alan Kohler told the committee earlier this year that the tax system sends “a clear signal that capital income is preferred over labour income.” He argued that this preference is a foundational cause of inequality in Australia.
Kohler noted that capital gains tax is “over adjusted for inflation,” while income tax is not. He added that the 50% capital gains discount is “more than it needs to be to adjust for inflation” and has encouraged investment.
This, in turn, has increased demand for property “and probably more importantly, it increased what investors were prepared to pay for property.”
Last week, Treasurer Jim Chalmers expressed his satisfaction if the 2026-27 budget was described as a “tax reform budget.” However, Mr Albanese admitted on Monday that the budget would likely be released later than usual.
“The budget is now less than a month away … the government’s budget processes will continue today. They’ll continue next week,” he said.
Potential Overhaul of NDIS
Mr Albanese also suggested the possibility of a major review of the National Disability Insurance Scheme (NDIS). He emphasized that the NDIS was designed to assist individuals with permanent disabilities who struggle to fully participate in society.
“It’s undermined if four out of 10 kids in a class are on the NDIS,” he said. “That wasn’t why it has that public support, and we need to make sure that we maintain public support by ensuring it’s sustainable.”
The Albanese government has already taken steps to scale back parts of the NDIS, particularly support for children with mild autism. These children would now receive assistance through the Thriving Kids program, which involves state and territory governments outside of the NDIS framework.
However, this initiative has faced resistance from state and territory leaders who are hesitant to fund it. The Prime Minister has ruled out means testing for the NDIS.
“Eligibility should be about people’s disability and enabling them to fully participate in society,” he told the Australian Financial Review.
